Financial Results for the year ended 31 March 2017

MEIKLES LIMITED

ABRIDGED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2017

CHAIRMAN’S STATEMENT

It gives me pleasure to present the Chairman's Report for the year ended 31 March 2017.

AMOUNT OWED TO THE COMPANY BY GOVERNMENT

Your Chairman and colleagues visited the Minister of Finance and his colleagues on two occasions. The Governor of the Reserve Bank of Zimbabwe was present at the first of the two meetings. The basis for an agreement between the Company and the Government of Zimbabwe was reached. Since then officials representing the Government and the Company have met to conclude the quantification of sums due following the agreement and to agree on the method of payment and timing thereof. The sum due to the Company together with accrued interest amounted to US$42.6 million as at 30 September 2016. This sum has not been included in the audited financial statements.

Although the basis of the agreement has been reached, Government has not as yet completed the necessary documentation to conclude the formalities relevant to the agreement.

OFFER BY ALBWARDY INVESTMENTS

Shareholders are aware of the Cautionary releases relating to the approach to the Company and its Shareholders by Albwardy Investments. Further Cautionary statements will be released as necessary, to ensure that Shareholders are appropriately informed of developments.

REVIEW OF PERFORMANCE

Meikles Limited comprises six operating segments as follows:

Supermarkets;

Agriculture;

Hospitality;

Stores (incorporating Department Stores and Wholesaling);

Financial Services;

Security Services.

Group Financial Results

The Group’s financial results for the year ended 31 March 2017, reflect the resilience of some of the Group’s operations to the persistent decline in economic activity in the country. Group revenue for the year amounted to US$457.6 million (2016: US$453.6 million), boosted by an exceptional performance by the Supermarkets segment. Revenue for the Supermarkets grew by 5% defying the negative effect of depressed consumer demand that prevailed during the entire financial year. Revenue for the other segments declined due to adverse trading conditions.

Expenditure was tightly controlled at all segments and significant ground was covered in reducing operating costs during the period. Net operating costs declined by 2% relative to the previous financial year, translating to a net US$7.8 million reduction in costs, despite an increase in rentals paid by Supermarkets following expansion. The initiatives on cost reduction have positioned the Group for leaner times the country is experiencing with declining revenue being the norm.

The Group achieved a strong EBITDA growth, a pleasing result achieved under tough trading conditions. EBITDA increased by US$12.6 million or 104% from US$12.2 million to US$24.8 million. The contribution by each material segment to the Group’s EBITDA is set out in the notes to these abridged audited financial statements.

Profit before tax for the year came in at US$5.3 million recovering from a US$17.8 million loss in previous year. The turnaround was achieved primarily due to strong EBITDA growth assisted by absence of impairment charges on investment in Mentor Africa Limited as well as reduced losses on discounting Treasury Bills.

Group borrowings at 31 March 2017, stood at US$66.2 million and were US$11.8 million lower than the level of US$78.0 million at 31 March 2016. Consequently interest paid for the year ended 31 March 2017, fell by 13% to US$9.2 million. The restructuring of short term loans to medium term facilities is in progress.

The Group adopted changes in accounting for bearer plants as per the amendments to International Accounting Standards 16 and 41 effective for financial periods beginning 1 January 2016. Consequently tea bushes, coffee bushes, macadamia trees and avocado trees are now being carried at cost and depreciated over their productive lives. Prior year comparative figures have been restated as a result. The effect of the restatement on prior year comparative figures is disclosed in note 9 of these abridged financial statements.

Supermarkets – trading as TM and Pick n Pay

The segment had an eventful financial year with the climax being the reopening of the refurbished and rebranded flagship branch at Village Walk in Borrowdale. Despite the biggest branch TM Borrowdale operating under renovations for a greater part of the financial year, the segment achieved yet another set of exceptional results for the financial year ended 31 March 2017. Revenue for the year grew by 5% to US$414.0 million relative to the prior year. The segment has achieved revenue growth year on year since 2013, spurred by branch network expansion and upgrades.

Gross profit margin for the year improved by 2 percentage points due to improved efficiency in procurement coupled with reduction in wastage and shrinkage. The investment in equipment upgrades, mainly refrigeration, has had a significant impact in reducing wastage.   

Operating costs grew by 7% due to incremental costs of new branches as well as increased depreciation on new equipment. EBITDA for the year grew by 50% to US$23.8 million (2016: US$15.9 million).

CHAIRMAN’S STATEMENT (continued)

The segment is now ungeared following the payment of the last installment in October 2016 of the US$25 million loan taken to expand and upgrade the branch network. The segment is now capable of funding expansion and upgrades from operating cash flows. Two new branches are at an advanced stage of development. These branches are expected to commence trading during the second half of this financial year.

Agriculture

The segment generated EBITDA of US$6.1 million during the year ended 31 March 2017, compared to just US$255,000 in prior year marking a historic turnaround in the viability of the business. Revenue went down by 6% to US$21.2 million (2016: US$22.4 million). The decline in revenue was due to a 20% fall in tonnage of bulk tea exports. Prior year’s tonnage of bulk tea exports was higher due to build-up of stocks during the period from December 2014 to March 2015, when exports were on hold pending the granting of the Rainforest Alliance certification.

International bulk tea export prices were firmer throughout the year averaging US$1.55 / kg in the 12 month’s period to 31 March 2017, compared with average of US$1.37 / kg in the prior year. The segment experienced record heat and evaporation in the Chipinge District in September and October 2016. Fortunately after a disastrous start to the season, meaningful rainfall averaging 1 400 mm fell from November 2016 to March 2017 covering all estates. The ultimate production of 8 103 tonnes of made tea was 12% above prior year of 7 261 tonnes.

New crops are progressing well and some 4 year old macadamia nut fields will yield an average of 400 kgs per hectare in the coming financial year. The average price of macadamia nuts of US$2.99 / kg was 19 US cents higher than the prior year. The average coffee export price was US$3.20 / kg. AAA grades fetched between US$4.60 / kg and US$5.00 / kg. The segment installed the second line of a four lane sizing machine in the avocado pack house ahead of the harvesting and toll processing period of April to June 2017.

The segment benefited from the Reserve Bank of Zimbabwe’s 5% export incentive which boosted our exports of packed tea into the region.

Tingamira water sold in the year to March 2017 was 2.4 million litres. The brand has firmly established itself in the market as a premium brand for those customers who prefer to ‘drink from a trusted source’.

The Rainforest Alliance (Sustainable Agriculture), International Standards Organization (ISO - on packed tea), GlobalGAP (on avocadoes) and Standards Association of Zimbabwe (SAZ on bottled spring water) are all in place making our products acceptable worldwide.

Hospitality

The segment’s revenue for the year of US$14.7 million (2016: US$15.8 million) declined by 7% relative to the previous year, weighed down by the fall in room occupancy and average room rates in Harare. Trading results at Meikles Hotel reflected the deepening economic challenges the country is facing. Room occupancy reduced by 3.41 percentage points and the average daily rate retreated by 13%. Consequently revenue per available room for the year reduced by 20%.

The rebound in international tourist arrivals in Victoria Falls assisted in containing the decline in the segment’s revenue to a single digit rate. Room occupancy at The Victoria Falls Hotel grew by 2.31 percentage points to 55.02% (2016: 52.71%). The average daily rate increased by 4% and combined with occupancy growth resulted in increased revenue per available room by 8%.

Operating costs for the year reduced by 8%. At Meikles Hotel, operating costs decreased by 12% reflecting the combined effect of reduced room occupancy and cost reduction initiatives implemented by management. EBITDA for the year was US$1.8 million (2016: US$1.7 million), savings on operating costs offsetting the decline in revenue growth.

Recently, The Victoria Falls Hotel Partnership renegotiated the extension of the lease of the The Victoria Falls Hotel for a longer tenure.  Preparatory work for the second phase of refurbishment of the hotel is underway with the works expected to commence before the end of this financial year.

Stores

The segment’s revenue for the financial year ended 31 March 2017 was US$9.0 million (2016: US$22.2 million), reflecting a decrease of 59% over last year. The absence of trading stock following various constraints on foreign and local payments had a negative impact on the business in the last quarter of the financial year. The number of trading units (wholesaling) were reduced from 9 to 5 in view of working capital constraints. Leases were exited in unprofitable and high overhead stores resulting in staff cost reduction and significant savings on occupancy costs. The business has now been realigned and focused in a way that has positioned it for future growth.

New stores were opened in strategic locations. These stores are performing above expectations. Total operating expenses decreased by 9% over the year. EBITDA loss was US$4.1 million (2016: loss of US$2.5 million).

Further development plans and store roll-outs are in progress. Four new stores will be opened in the first quarter of the 2018 financial year, two stores in Bulawayo, an M-store at Bradfield and a Meikles Mega Store adjacent to Meikles Bulawayo and two Meikles Mega Stores in Kwekwe and Mutare. The key strategy is to open new stores in Group owned premises and strategic locations.

The new REACTS point of sale and back office system which was fully implemented in all Meikles Mega Market outlets is providing information to effectively deal with pricing, unit stock control and accurate sales data.

Customer credit terms continued to be tightened but in spite of this credit sales were 58% (2016: 69%) of sales for the department stores. The collection rate on trade debtors improved to 25% (2016: 23%). However, the bad debt write–off increased to 4.5% (2016: 2.2%), being a reflection on the lack of disposable income and uncertain pay days among other factors. Consequently customers’ arrears increased to 19% (2016: 14%) in the period under review. As at 31 March 2017 there were 29,612 active customers.

CHAIRMAN’S STATEMENT (continued)

Although the segment still has legacy issues surrounding certain merchandise which can only be sold at reduced margins, the segment expects substantial growth in the second quarter of the 2018 financial year, if the planned new stores are opened and adequate funding for stock and working capital is secured. The segment is expected to return to profitability by the end of the second quarter of 2018 financial year. The full potential of the segment will be achieved in the third quarter.

Financial Services

Meikles Financial Services (MFS) faced a mixed trading year to 31 March 2017. The highlight for the year was the rapid uptake of the MyCash Card, the low-cost, multi-featured bank account which was launched in early 2016. At 31 March 2017, there were in excess of 150,000 account holders covering all demographic groups. We expect this level of growth to continue throughout 2017 and beyond.

On the negative side, the cash shortages that have prevailed in Zimbabwe over the past year have led to a significant decline in acquirer revenues. This has impacted our efforts to extend our presence across Zimbabwe. Despite this, MFS opened a further 4 kiosks in TM Pick n Pay Supermarkets bringing the total to 45 at 31 March 2017.

MFS continues to adapt to the changing environment and we remain confident that the company will become a major player in the field of Financial Services.

Security Services

Meikles Guard Services (MGS) continued to expand its customer base outside the Group companies and secured twenty three additional posts during the period under review. The total number of posts at 31 March 2017 stood at 268, of which 220 were posts within the Group and 48 posts were from organisations outside the Group. We await the awarding of security tenders that MGS was recently invited to submit. The tenders lodged are for various organisations including embassies, corporates and financial institutions.

MENTOR AFRICA LIMITED

The value of the Group’s investment in Mentor Africa Limited (“Mentor”) remained at the same level as last year in South African Rand terms. In US$ terms the value increased by US$2.1 million due to the South African Rand being 10% firmer against the US$ at 31 March 2017, relative to last year. The increase in value is not reflected in the financial statements as IFRS does not permit the upward revaluation of investment balances accounted for at cost less impairment losses. A dividend of ZAR16.6 million was received from the investment (2016: ZAR18.4 million). It should be noted that Mentor changed its financial year end to 31 December. The dividend received above was declared based on financial results for a nine months trading period.

MEIKLES FOUNDATION

The financial year ended 31 March 2017, saw an end to a particularly challenging year for the Meikles Foundation with dwindling direct financial support for projects from the Meikles Group.

The Foundation had to re-think its modus operandi, to be able to continue to function and contribute to the society of Zimbabwe.  We are proud to report that in this harsh economic climate, the Foundation’s philanthropic contribution was in the region of US$120,000, the majority of which was ‘in-kind’ contributions and donations. A significant portion of the ‘in-kind’ donations were through assistance from the Meikles Group where the Foundation identified under-utilised assets and ‘on-gifted’ their use to various groups and organisations. The Foundation, with its network played a key role in linking, negotiating, sourcing goods and services from within the Meikles Group, other corporates in Zimbabwe, NGO’s and the diplomatic corps.

Key achievements were the donating of space to the dance troupe Nhaka Tumbuka in Speke Avenue and the re-utilising of space for the dance school Afrikera Arts Studio - the Hub along Robert Mugabe street where fifteen prospective students from the city surrounds have the opportunity to study dance, as well as business management for three years and graduate with an internationally recognised diploma. Africalia and the Meikles Foundation fund this project. The Foundation also funded both KidzCan and Island Hospice & Healthcare for medication, supplementary feeding programmes, funding for small agricultural projects aimed at self-sustainability and emergency funding for destitute and abandoned babies and displaced families.

Moving forward, the focus of the Meikles Foundation for the upcoming financial year is to continue to strengthen partnerships with the Meikles Group as well as the donating society, and to streamline projects commitments whilst being ever mindful of the volatile, uncertain, complex and ambiguous environment in which it operates.

Planned projects include partnering with TM Pick n Pay Annual Golf Day, a retreat home for children recovering from cancer treatment and always, wherever possible ad-hoc assistance for the vulnerable.

OUTLOOK

The new financial year began following above normal rainfall and a rebound of mineral prices on the international market. Strong marketing of the Group’s brands continue to be a key focus area across all the segments. Initiatives to reduce operating costs further continue in all segments. The restructuring of the Group’s debt will be completed during the course of the financial year.  Efforts to date in this regard are resulting in success.

DIVIDEND

The Board resolved not to declare a dividend for the year.

CHAIRMAN’S STATEMENT (continued)

APPRECIATION

I would like to extend my appreciation to our customers for their continued support and to our shareholders and regulatory authorities for their support and guidance. I would also like to extend my thanks and appreciation to fellow Board members, management and staff for their dedication and commitment.

JRT Moxon
Executive Chairman

31 May 2017

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2017

			Restated
		31 March 2017	31 March 2016
		US$ 000	US$ 000
Revenue		457,626	453,648
Net operating costs		(444,452)	(452,260)
Operating profit		13,174	1,388
Investment income		2,134	3,628
Finance costs		(9,163)	(10,516)
Impairment of investment in Mentor Africa Limited		-	(2,885)
Net exchange losses		(161)	(274)
Loss recognised on discounting Treasury Bills		(1,429)	(8,628)
Fair value adjustments on biological assets		789	(528)
Profit / (loss) before tax		5,344	(17,815)
Income tax expense		(6,090)	(4,860)
Loss for the year		(746)	(22,675)
Other comprehensive income, net of tax
Items that may be reclassified subsequently to profit or loss:
Reclassification adjustment relating to available-for-sale financial assets disposed of in the current year		441	4,471
Fair value gain on available-for-sale financial assets		653	6,860
Other comprehensive income for the period, net of tax		1,094	11,331
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE YEAR		348	(11,344)
(Loss) / profit for the year attributable to:
Owners of the parent		(6,719)	(26,045)
Non-controlling interests		5,973	3,370
		(746)	(22,675)
Total comprehensive (loss) / income attributable to:
Owners of the parent		(5,625)	(14,714)
Non-controlling interests		5,973	3,370
		348	(11,344)
Loss per share (cents)
Basic		(2.65)	(10.26)
Diluted		(2.46)	(9.53)
Headline loss per share (cents)		(2.00)	(7.68)
Diluted headline loss per share (cents)		(1.86)	(7.13)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2017

			Restated	Restated
		31 March 2017	31 March 2016	1 April 2015
		US$ 000	US$ 000	US$ 000
ASSETS
Non-current assets
Property, plant and equipment		172,664	170,454	164,601
Investment property		243	248	249
Investment in Mentor Africa Limited		20,046	20,046	22,931
Biological assets		1,147	1,227	1,624
Intangible assets		124	124	124
Other financial assets		11,901	12,004	12,246
Deferred tax		3,427	3,480	4,201
Total non-current assets		209,552	207,583	205,976
Current assets
Balances with Reserve Bank of Zimbabwe		-	-	7,229
Treasury Bills		3,024	11,106	22,942
Inventories		34,467	33,391	35,626
Trade and other receivables		13,969	14,248	19,645
Biological assets – produce on bearer plants		1,867	791	764
Other financial assets		4,134	3,493	4,093
Cash and bank balances		15,637	10,494	8,883
Total current assets		73,098	73,523	99,182
Total assets		282,650	281,106	305,158
EQUITY AND LIABILITIES
Capital and reserves
Share capital		2,538	2,538	2,538
Share premium		1,316	1,316	1,316
Other reserves		12,512	11,418	87
Retained earnings		83,683	90,402	116,447
Equity attributable to equity holders of the parent		100,049	105,674	120,388
Non-controlling interests		28,591	21,182	17,281
Total  equity		128,640	126,856	137,669
Non-current liabilities
Borrowings		9,241	11,063	24,402
Deferred tax		17,637	15,587	12,508
Total non-current liabilities		26,878	26,650	36,910
Current liabilities
Trade and other payables		70,155	60,700	60,397
Borrowings		56,977	66,900	70,182
Total current liabilities		127,132	127,600	130,579
Total liabilities		154,010	154,250	167,489
Total equity and liabilities		282,650	281,106	305,158

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2017

	Share capital	Share premium	Other reserves	Retained earnings
	US$ 000	US$ 000	US$ 000	US$ 000
2017
Balance at 1 April 2016 – as previously stated	2,538	1,316	11,418	93,222
Prior year adjustment	-	-	-	(2,820)
Balance at 1 April 2016 – restated	2,538	1,316	11,418	90,402
(Loss) / profit for the year	-	-	-	(6,719)
Other comprehensive income for the year	-	-	1,094	-
Non-controlling interests arising from Mopani Property Development (Private) Limited	-	-	-	-
Balance at 31 March 2017	2,538	1,316	12,512	83,683
2016 - restated
Balance at 1 April 2015 – as previously stated	2,538	1,316	87	115,934
Prior year adjustment	-	-	-	513
Balance at 1 April 2015 - restated	2,538	1,316	87	116,447
(Loss) / profit for the year	-	-	-	(26,045)
Other comprehensive income for the year	-	-	11,331	-
Non-controlling interests arising from Mopani Property Development (Private) Limited	-
Balance at 31 March 2016 - restated	2,538	1,316	11,418	90,402

	Attributable  to owners of parent	Non-controlling interests	Total
	US$ 000	US$ 000	US$ 000
2017
Balance at 1 April 2016 – as previously stated	108,494	21,182	129,676
Prior year adjustment	(2,820)	-	(2,820)
Balance at 1 April 2016 – restated	105,674	21,182	126,856
(Loss) / profit for the year	(6,719)	5,973	(746)
Other comprehensive income for the year	1,094	-	1,094
Non-controlling interests arising from Mopani Property Development (Private) Limited	-	1,436	1,436
Balance at 31 March 2017	100,049	28,591	128,640
2016 - restated
Balance at 1 April 2015 – as previously stated	119,875	17,281	137,156
Prior year adjustment	513	-	513
Balance at 1 April 2015 - restated	120,388	17,281	137,669
(Loss) / profit for the year	(26,045)	3,370	(22,675)
Other comprehensive income for the year	11,331	-	11,331
Non-controlling interests arising from Mopani Property Development (Private) Limited	-	531	531
Balance at 31 March 2016 - restated	105,674	21,182	126,856

CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 MARCH 2017
			Restated
		31 March 2017	31 March 2016
		US$ 000	US$ 000
Cash flows from operating activities
Profit / (loss) before tax		5,344	(17,815)
Adjustments for:
- Depreciation and impairment of property, plant and equipment and investment property		11,801	10,170
- Net interest		8,022	7,927
- Dividend income		(992)	(1,039)
- Net exchange losses		161	274
- Impairment of investment in Mentor Africa Limited		-	2,885
- Fair value adjustments on biological assets		(789)	528
Loss recognised on discounting Treasury Bills		1,429	8,628
- Loss / (profit) on disposal of property, plant and equipment		123	(25)
Operating cash flow before working capital changes		25,099	11,533
Decrease in inventories		(1,076)	2,235
Decrease in trade and other receivables		1,317	6,137
Increase in trade and other payables		8,986	1,246
Cash generated from operations		34,326	21,151
Income taxes paid		(3,520)	(915)
Net cash generated from operating activities		30,806	20,236
Cash flows from investing activities
Payment for property, plant and equipment		(14,229)	(16,831)
Proceeds from disposal of property, plant and equipment		230	203
Proceeds from sale of Treasury Bills and coupon interest		8,809	24,164
Net movement in service assets		37	630
Net movement in other  investments		(515)	885
Net expenditure on biological assets		(374)	(158)
Investment income		56	152
Net cash (used in) / generated from investing activities		(5,986)	9,045
Cash flows from financing activities
Net decrease in interest bearing borrowings		(11,745)	(16,621)
Proceeds on disposal of partial interest in a subsidiary without loss of control		1,436	531
Finance costs		(9,163)	(10,516)
Dividend paid – ordinary shareholders		-	(1,063)
Net cash used in financing activities		(19,472)	(27,669)
Net increase in cash and bank balances		5,348	1,612
Cash and bank balances at the beginning of the year		10,494	8,883
Net effect of exchange rate changes on cash and bank balances		(205)	(1)
Cash and bank balances at the end of the year		15,637	10,494

NOTES TO THE ABRIDGED AUDITED FINANCIAL STATEMENTS

1. Basis of preparation

The abridged audited financial statements are prepared from statutory records that are maintained under the historical cost basis except for biological assets and certain financial instruments which are measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

2. Statement of compliance

The Group’s abridged audited financial results have been extracted from financial statements prepared in accordance with International Financial Reporting Standards and the Companies Act (Chapter 24.03) and relevant statutory instruments (SI33/99 and SI62/96). These abridged financial results should be read in conjunction with the complete set of financial statements for the year ended 31 March 2017 which have been audited by Deloitte & Touche Chartered Accountants (Zimbabwe) and an unmodified audit opinion issued thereon. The auditors have included a section on key audit matters. The key audit matters were on material uncertainty related to going concern, valuation of biological assets and contingent assets and liabilities. The auditor’s report is available for inspection at the Company’s registered address.

3. Accounting policies

Accounting policies and methods of computation applied in the preparation of these abridged audited financial statements are consistent, in all material respects, with those used in the prior year, except for the effect of the newly revised International Financial Reporting Standards (IFRSs) on Agriculture: Bearer Plants (Amendements to IAS 16 and IAS 41). Please refer to note 9 for more details.

4. Going concern

The Directors assess the ability of the Group to continue in operational existence in the foreseeable future at each reporting date. As at 31 March 2017, the Directors have assessed the Group’s ability to continue operating as a going concern and believe that the preparation of these audited financial statements on a going concern basis is still appropriate.

5. Treasury Bills

Below is an analysis of the movement in the Treasury Bills’ balance during the year:

		Group and Company	Group and Company	Group and Company	Group and Company
		31 March 2017	31 March 2017	31 March 2016	31 March 2016
		US$ 000	US$ 000	US$ 000	US$ 000
		Fair (Market) value	Nominal value	Fair (Market) value	Nominal value
Balance at the beginning of the year		11,106	12,247	22,942	35,414
Treasury Bills received during the year		-	-	5,769	6,500
Gain on replacement of Treasury Bills		-	-	8,320	2,229
Interest for the year		1,061	409	2,396	940
Coupon interest received		(551)	(551)	(330)	(330)
Treasury Bills disposed during the year		(8,592)	(9,034)	(27,991)	(32,506)
Balance at the end of the year		3,024	3,071	11,106	12,247
Analysis of balance
Treasury bills on hand at end of the year		2,480	3,000	9,889	11,964
Accrued interest		544	71	1,217	283
Balance at the end of the year		3,024	3,071	11,106	12,247

The Treasury Bills have been designated as “available-for-sale” (AFS) financial assets and were initially recognised / measured at fair (market) value. The fair (market) value of the Treasury Bills on initial recognition, and at 31 March 2017, was calculated based on a yield to maturity of 17%. This yield to maturity was determined with reference to the percentage discount to the nominal value of the Treasury Bills at which the Company has been able to sell certain of the Treasury Bills in the open market during the preceding and current financial years.

Interest income on the Treasury Bills is recognised using the effective interest rate method and is included in “Investment income” in the Statement of Profit or Loss and Other Comprehensive Income. At 31 March 2017, Treasury Bills with a nominal value of US$3.1million (2016: US$12.2 million) were pledged as security for loans with a carrying value of US$3.6 million (2016: US$14.1 million).

Treasury Bills issued by the Reserve Bank of Zimbabwe held at 31 March 2017:

		Group and Company	Group and Company
		31 March 2017	31 March 2016
		US$ 000	US$ 000
At fair (market) value
Treasury Bills maturing on 10 April 2017 with a coupon rate of 5%		3,024	11,106
		3,024	11,106

NOTES TO THE ABRIDGED AUDITED FINANCIAL STATEMENTS

5. Treasury Bills (continued)

The salient terms of the Treasury Bills held at 31 March 2017 are as follows:

Treasury Bill number		ZTB73120150410Z
Issue date		10/04/2015
Redemption date		10/04/2017
Nominal value - including accrued interest (US$ 000)		3,071
Coupon		5.0%
Coupon payment dates		10 April and 10 October
Fair value - including accrued interest (US$ 000)		3,024

6. Segment information

		Restated
	31 March 2017	31 March 2016
	US$ 000	US$ 000
Revenue
Supermarkets	413,997	395,297
Hotels	14,667	15,812
Agriculture	21,173	22,412
Departmental stores	4,640	6,465
Wholesaling	4,432	15,740
Corporate*	(1,283)	(2,078)
	457,626	453,648
EBITDA
Supermarkets	23,807	15,911
Hotels	1,814	1,699
Agriculture	6,096	255
Departmental stores	(1,333)	(186)
Wholesaling	(2,797)	(2,326)
Corporate*	(2,779)	(3,152)
	24,808	12,201
The EBITDA figures are before Group management fees.
		Restated
	31 March 2017	31 March 2016
	US$ 000	US$ 000
Segment assets
Supermarkets	98,532	88,113
Hotels	46,460	47,557
Agriculture	76,038	74,254
Departmental stores	26,899	30,015
Wholesaling	4,196	4,268
Corporate*	30,525	36,899
	282,650	281,106
Segment liabilities
Supermarkets	43,314	46,716
Hotels	22,782	22,887
Agriculture	30,944	32,552
Departmental stores	17,286	16,984
Wholesaling	8,690	6,049
Corporate*	30,994	29,062
	154,010	154,250
*Intercompany transactions and balances have been eliminated from the corporate amounts. Corporate also includes other subsidiaries that are immaterial to warrant separate disclosure.

		Restated
	31 March 2017	31 March 2016
7. Other information	US$ 000	US$ 000
Depreciation of property, plant and equipment and investment property	10,653	9,826
Impairment of property, plant and equipment	1,148	343
Capital commitments authorised by the Directors but not contracted for	13,500	19,715
Group’s share of capital commitments of joint operations	-	2,651

NOTES TO THE ABRIDGED AUDITED FINANCIAL STATEMENTS

		Restated
	31 March 2017	31 March 2016
	US$ 000	US$ 000
8. Net borrowings
Non-current borrowings	9,241	11,063
Current borrowings	56,977	66,900
Total borrowings	66,218	77,963
Cash and cash equivalents	(15,637)	(10,494)
Net borrowings	50,581	67,469
Comprising:
Secured	55,773	68,454
Unsecured	10,445	9,509
	66,218	77,963
The weighted average cost of borrowings for the year was 13.63% per annum (2016: 11.48% per annum). The Group has issued cross company guarantees worth US$29.8 million (2016: US$36.9 million) for Group borrowing facilities.

9. Prior year adjustment - change in accounting policy for bearer plants (Amendments to IAS 16 And IAS 41 Agriculture: Bearer Plants)

The Group has applied the above amendments for the first time in the current year. The amendments define a bearer plant and require biological assets that meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with IAS 16, instead of IAS 41. The produce growing on bearer plants continues to be accounted for in accordance with IAS 41.

The application of these amendments has had a material impact on the Group’s consolidated financial statements, as the Group is engaged in agricultural activities through one of its subsidiaries, Tanganda Tea Company Limited. Retrospective adjustments have been made to the financial statements with effect from 1 April 2015, the beginning of the earliest period presented, as required by the transitional provisions of these amendments.

The Group has elected to measure bearer plants at their fair value at the beginning of the earliest period presented, 1 April 2015, and have used that fair value as the deemed cost of the bearer plants as at that date. Adjustments were made to opening retained earnings at 1 April 2015 for the fair value differences on the produce growing on the bearer plants.

The effect of the restatement to the March 2016 consolidated financial statements is as summarised below:

		Group
		31 March 2016
Effect on the consolidated statement of profit or loss and other comprehensive income		US$ 000
Increase in net operating costs (depreciation)		(664)
Decrease in fair value gain on biological assets		(3,118)
Decrease in deferred tax expense		449
Decrease in profit		(3,333)
Decrease in basic loss per share		(1.31)
Decrease in diluted loss per share		(1.22)
Decrease in headline loss per share		(1.29)
Decrease in diluted headline loss per share		(1.20)
Effect on the consolidated statement of financial position
Increase in property, plant and equipment		41,021
Decrease in biological assets		(43,927)
Decrease in trade and other receivables		(363)
Decrease in deferred tax liability		449
Decrease in equity		(2,820)
Effect on opening retained earnings (1 April 2015)
Increase in opening retained earnings		513

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